Rethinking the Iberian Transformations: How Democratization Scenarios Shaped Labor Market Outcomes

This article examines how dissimilar democratization scenarios in two historically important cases helped to shape a major societal outcome, that of unemployment levels. With an empirical focus on the neighboring countries of the Iberian Peninsula, the paper argues that Portugal's relative success and Spain's persistent failures in the provision of employment cannot be fully explained by the focus of some analysts on comparative labor costs, and that the Iberian countries' employment levels also rest on a set of factors connected in sometimes complex ways with the two societies' very different paths from authoritarianism to democracy in the 1970s. Factors emphasized include the degree of incorporation of women into the labor force, the availability of adequate financing for small and medium enterprises—and the impact of national financial systems and state policies on that intermediary outcome—and the extent to which the two countries' welfare states are employment friendly. Central to this article's argument is the claim that the divergence between these Third Wave pioneers in their democratization scenarios accounts for the dissimilar penetration into the Iberian cases of another global wave of the late twentieth century, that of market-centric economic liberalization.